COUP-TFI and II are members of the orphan subgroup of the steroid/thyroid hormone receptor superfamily. Although COUP-TFs are well characterized biochemically, the precise physiological roles of COUP-TFs are largely undefined. Mutational analysis and ectopic expression of COUP-TFs in flies and frogs suggest that COUP-TFs are important for survival during embryonic development. Although the expression patterns of COUP-TFI and COUP-TFII overlap in some regions, each factor possesses its own distinct expression profile and, hence a unique specific physiological role. The temporal and spatial expression pattern of COUP-TFII in the mesenchyme of many developing organs, including kidney, suggests that COUP-TFII is important for organogenesis via mesenchymal-epithelial interactions. To assess the molecular and physiological roles of COUP-TFII in development and organogenesis, we have generated COUP-TFII null mutant mice by homologous recombination. Mice deficient of COUP-TFII die before E10.0 with striking fetal vasculature defects. The aberrant vasculature formation in the COUP-TFII null mutants suggests COUP-TFII either directly regulates periendothelial cell differentiation or regulates endothelial cells through paracrine signals. In either event, it may be hypothesized that COUP-TFII is important for mesenchyme-epithelial interactions in formation of embryonic vasculature. Since the COUP-TFII deficient mutants die prior to kidney formation, it is necessary to generate a kidney-specific knock out in order to evaluate the role of COUP-TFII in nephrogenesis. To facilitate the identification of a kidney-specific COUP-TFII promoter, we need to study possible tissue-specific regulation of COUP-TFII. Finally, we have recently shown that COUP-TFII is regulated by sonic hedgehog (Shh), a key morphogen controlling pattern formation and mesenchymal-epithelial interactions. Thus, we will identify the factor(s) which mediates the sonic hedgehog response. We believe that this is a timely proposal, and that results obtained from the studies will define the role of COUP-TFII in mesenchymal-epithelial interactions during organogenesis.